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Wednesday, 1 June 2011

VC Factsheet: BESSEMER VENTURE PARTNERS

Company Summary and HistoryBessemer Venture Partners, formed in 1911, is one of the longest-standing venture capital firms in the United States. The founder Henry Philips Jr. formed Bessemer Securities Corporation, as part of which Bessemer Venture Partners (BVP) originally operated, to manage and invest the proceedings from the sale of Carnegie Steel, founded with Andrew Carnegie. Since 1975, Bessemer Venture Partners has operated as a standalone partnership with Bessemer Securities Corporation as its primary limited partner.

Key PeopleSandy Grippo: Sandy holds a BS in accounting from Lehigh University and is a fully qualified C.P.A. She became the Chief Financial Officer at BVP in 2002. Sandy brought with her experience from JP Morgan Partners, where she held the role of Vice President, concentrating on partnership accounting, partnership taxes, and fund operations. Prior to that she was an audit manager at Ernst and Young, specializing in hedge fund and private equity clients.

Christopher Gabrieli: A partner at BVP who joined the firm in 1986. He established the firm’s healthcare practice and leads its healthcare investing. Christopher has invested in over 36 companies, mostly biotechnology or medical services such as Sirtis Pharmaceuticals, PerSeptive and VistaCare. He came 59th on Forbes 2011 Midas List of top technology investors. Before working at BVP Christoper founded and served as CEO of GMIS, a leading healthcare information technology company. Christopher gained his B.A in History and Science from Harvard Univesity, and completed two years of the Columbia College of Physicians & Surgeons M.D. program.

David Cowan: A managing partner at Bessemer Ventures who joined in 1992, since then making 45 early-stage investments for Bessemer, of which 20 have gone public and 18 have been acquired by public companies. David ranked 31st on Forbes 2011 Midas List. He co-founded VeriSign and other investments in his portfolio including companies such as Billshrink, Tumbleweed and Postini (acquired by Google for 625 million USD). David studied for his A.B. in Math and Computer Science and also a MBA at Harvard University.

J. Edmund Colloton: Joined BVP in 2001. He is currently the Chairman of Investment Committee, Chairman of Management Committee, a Managing Partner and also leads operations at Bessemer Venture Partners. He brings experience from JP Morgan Capital as Chief Operating Officer and a financial services investor, and from Davis Polk & Wardwell as a private equity lawyer. In the U.S Navy, Ed served as a representative for international negotiations at the Joint Chiefs of Staff, during which time he also received a Navy commendation medal. In 2009 he was ranked as a leading venture capitalist in Forbes Midas List. Edmund gained his A.B. in Economics from Cornell University and JD from Harvard Law School.

Robert (‘Bob’) P. Goodman: Joined the firm in 1998 and was the founding partner of the firm’s Larchmont, New York, investment office. Bob has experience in start-ups having successfully founded two himself; boatphone and Celcore, later acquired by DSC which in turn got acquired by Alcatel. He was also ranked 47th on Forbes 2011 Midas List. Bob studied for his B.A and MBA at Brown and Columbia University respectively.

High Profile DealsLinkedin: is one of the most popular social networking sites for professionals. It was series C funded by Bessemer Venture Partners and another investor to the tune of 12.8 million USD. Linkedin went on to receive Series D and Series E founding rounds of 53 and 22.7 million USD, respectively. In May 2011 the company completed its IPO, giving the company a valuation of 8.91 billion USD. As such BVP’s stake in the company is worth 431.5 million USD.

Flarion: provides internet solutions for the wireless communications market. It received series A funding from Bessemer Venture Partners, Charles Rivers Ventures and Pequot Capital totalling at 12.5 million USD. Flarion was later acquired by Qualcomm for 600 million USD.

Skype: is a VOIP application that allows users to make voice calls over the internet. BVP were early investors in Skype, leading the Series A funding round in August 2004 before it was acquired by eBay in October 2005 for 2.6 billion USD, giving BVP a return a hundred times that of their original outlay. Ebay eventually sold the majority of Skype’s shares to a consortium of investors in 2009. In May 2011 Skype was acquired by Microsoft for 8.5 billion USD.

VeriSign: operates a diverse array of network infrastructure, including two of the Internet's thirteen root nameservers (e.g. .com, .net, and .tv). David Cowan of BVP co-founded VeriSign as a Bessemer-funded spinout of RSA Security. Verisign sold its authentication business unit – which included SSL (secure socket layer), PKI (public key infrastructure), Verisign Trust Seal, and Verisign Identity Protection (VIP) services – to Symantec for 1.28 billion USD in 2010.

Requirement for capital investment in startupsBVP's investment portfolio is primarily focused on the following sectors: cleantech, cloud computing, data security, financial services, healthcare and online retail. They are also currently actively investing in Indian technology firms

They tend to invest in companies that have between 1 and 12 million USD in trailing 12 month revenue. In terms of funding needs companies normally have a pre money valuation in the 3 to 20 million USD range, are seeking capital of 1 to 10 million USD and have previously raised between 0.5 to 5 million USD. BVP portfolio investments are expected to generate 50 million to 250 million USD in revenue by year 5 and deliver returns of 10x to 30x. Portfolio investments are also expected to break even between years 1 and 3 and exit between years 2 and 7.